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And I'm Melissa Block.
President Bush today nominated Ben Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve Board. Greenspan's final term ends on January 31st, and it cannot be renewed. The 51-year-old Bernanke has been head of the president's Council of Economic Advisers since June. NPR's John Ydstie has more on the president's choice.
JOHN YDSTIE reporting:
During Greenspan's 18-year tenure, the Fed chairmanship has often been described as the second most powerful job in Washington, affecting interest rates, employment and inflation. Flanked by Greenspan and Bernanke in the Oval Office today, President Bush listed his nominee's qualifications for the job, citing experience as a prominent researcher and economics professor and nearly three years as a Federal Reserve Board governor before becoming the president's top economic adviser.
President GEORGE W. BUSH: He's earned a reputation for intellectual rigor and integrity. He commands deep respect in the global financial community. And he will be an outstanding chairman of the Federal Reserve.
YDSTIE: The president went on to praise Greenspan for his stewardship of the US economy, which has included managing stock market crashes, shocks like 9/11 and the longest period of growth in US history.
Pres. BUSH: He has dominated his age like no central banker in history. He has contributed to a better life for all Americans, and I thank him for his service. Ben Bernanke is the right man to build on the record Alan Greenspan has established.
YDSTIE: When it was his turn to step forward, Bernanke made this pledge.
Dr. BEN BERNANKE (Federal Reserve Chair Nominee): If I'm confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years.
YDSTIE: That statement will please a wide swath of people, from investors to lawmakers, who value the low inflation and relative stability of the Greenspan era. Indeed, the stock market rallied as it became clear Bernanke was to be the nominee, and his confirmation by the Senate seems all but assured. The response was also positive in the economics community, where Bernanke is viewed as a mainstream thinker and superior intellect. David Wyss is chief economist at Standard & Poor's.
Mr. DAVID WYSS (Chief Economist, Standard & Poor's): Generally I think Bernanke is perhaps one of the best-qualified Fed chairman in history, at least on paper. We just have to see how he does it in practice.
YDSTIE: Former colleagues at the Fed have suggested Bernanke has much in common with Greenspan in his approach to monetary policy, specifically in his willingness to be pre-emptive but systematic in moving interest rates to block inflation and head off recession. One issue on which he differs with Greenspan is his advocacy of explicit inflation targets; that is, publicly stating that Fed policy will be aimed at keeping inflation in a specific range, say between 1 and 2 percent. That would eliminate some of the guessing in the markets about what the Fed is up to. But David Wyss says efforts by the European central bank to do that have been largely unsuccessful.
Mr. WYSS: It just seemed to focus on inflation pretty much to the exclusion of anything else that was going on in the world--for example, the dreadful state of the European economies.
YDSTIE: Critics of inflation targeting also say it would take away the flexibility to deal with events like stock market meltdowns and terrorist attacks.
The other concern Wyss has is that Bernanke lacks the political experience that Greenspan and former Chairman Paul Volcker had before they took the job. Ned Gramlich, who recently retired as a Fed governor, says Bernanke's politics aren't apparent in his approach to policy.
Mr. NED GRAMLICH (Former Fed Governor): Ben is a Republican. The reason I know that is that he says he's a Republican; that is, you cannot tell that he's a Republican from his discussion of issues.
YDSTIE: That should give Bernanke more bipartisan credibility on Capitol Hill. Whether he will have the political savvy to work the levers of power in Washington as successfully as Greenspan remains a question. John Ydstie, NPR News, Washington.
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